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How to effect an appropriate mechanics lien waiver to avoid possible supplier bills that could result from non-payment to the supplier by the contractor nt

TexasLien Waivers

My son, Paul, who lives in Houston, and I, in Illinois, own the Houston house together. It is being remodeled for resale and payments have been made for materials, etc., right along. Work is almost done and Paul plans to withhold 10% before final payment. No lien waiver was completed. Pierson sent me a copy of the Conditional waiver and Alex believes that is what Paul needs to have signed. However, it asks for final payment information. Are we protected against any mechanics lien between the last payment and the final 10% if he completes the conditional waiver? Can the form be modified to include both payment dates? If not, what does he need to do? I am trying to help out; being retired I have more time than he does to search out the information

1 reply

Mar 25, 2019

Good question! As someone who grew up projecting with my parents, I can appreciate your situation. Let's look at some information surrounding the different types of Texas lien waivers. But, before diving in, here are some resources I think should be valuable: (1) Texas Lien Waivers Overview; and (2) The Ultimate Guide to Lien Waivers. Anyway, let's talk about Texas waivers. In Texas, there are four different types of lien waivers: (1) Final Conditional, (2) Final Unconditional, (3) Partial Conditional, and (4) Partial Unconditional. Each of the final lien waivers is designed for situations where final payment in in play (generally, conditional waivers are used before payment is made, and unconditional waivers are used after payment is made). Each of the partial or "progress" lien waivers is designed for situations where further payment is expected (again, generally, conditional waivers are used when payment is expected, and final waivers are used after payment is made). Note, though, that once payment is made that's in line with a conditional waiver that's submitted, that conditional waiver becomes binding. But, to the extent that a conditional lien waiver remains unpaid, there will still be exposure to a potential mechanics lien claim. Finally, keep in mind that if a lien waiver is executed and final payment will later be made, an owner can always request additional waivers to make sure all of their bases are covered. It's common for an owner to request a final conditional waiver that waives absolutely all lien rights for a job after the final payment is made and nothing is owed to the prospective claimant (including any and all retention amounts). As a final note - keep in mind that Texas is a state that features statutory lien waiver forms - and any alteration made to the statutory forms could actually work to invalidate the waiver altogether. So be careful when exploring the potential for editing the Texas lien waiver forms. For more information on Texas mechanics liens themselves, this resource should be helpful: Texas Lien & Notice Overview.

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